DEALTALK-Banks pin hopes for Brazil IPO revival on Levy's success

SAO PAULO Feb 4 (Reuters) - Any revival in initial public
offerings in Brazil seems to hinge on whether new Finance
Minister Joaquim Levy can clean up public finances and get the
country's economy back on track.

Strengthening the market for new listings depends
increasingly on how much leeway President Dilma Rousseff will
give the University of Chicago-trained economist to cut Brazil's
record budget gap and reverse the interventionist policies that
marred her first term.

Stung by dozens of deals that failed to deliver the promised
returns in recent years, money managers have become cautious
about Brazilian offerings. In 2014, only one company went public
on the São Paulo Stock Exchange, the worst performance for
domestic IPOs in 11 years.

Local pension funds such as Fundação Cesp and global
investors like BlackRock Inc have reason to remain wary
of Brazilian IPOs. Only a third of the 146 debut offerings that
priced in São Paulo since 2005 have generated gains above the
benchmark interbank CDI interest rate.

But while Levy's plans for higher taxes and less public
spending risk pushing Brazil back into recession this year,
institutional investors believe these moves are necessary to
pave the way for a sustained rebound.

Investors are waiting to see whether Rousseff, a leftist
known for her active role in economic policy, can stomach a
downturn while Levy takes unpopular austerity measures to get
public accounts back in order.

Without a stable economic backdrop and a renewed commitment
to fiscal discipline, institutional investors will remain
reluctant to buy into Brazilian companies without much of a
track record or earnings visibility.
Continuación...